Auto Net v Tyler - [2021] NZHC 542

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-419-000327

[2021] NZHC 542

BETWEEN
AUTO NET

Plaintiff

AND

MICHAEL STEVEN TYLER

Defendant

CIV-2020-419-000142

BETWEEN

ROBERT DEVON STONE
Plaintiff

AND

MICHAEL STEVEN TYLER

First Defendant

AND

AUTO NET

Second Defendant

Hearing: 11 March 2021 (by AVL)

Appearances:

C Hanafin for Plaintiff

U B Keller for Defendants

Judgment:

17 March 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 17 March 2021 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

AUTO NET v TYLER [2021] NZHC 542 [17 March 2021]

[1] The plaintiff (Auto Net) seeks leave to appeal to the Court of Appeal pursuant to s 56(3) and (4) of the Senior Courts Act 2016 from a decision of Associate Judge Smith of 21 September 2020 refusing it summary judgment against the defendant (Mr Tyler).1 The application is opposed.

Background

[2] Auto Net is incorporated in the Cayman Islands and is one of a number of companies around the world owned by interests associated with Robert Stone (Mr Stone) and Hohua Hemi (Mr Hemi). At relevant times the director of Auto Net was David Roberts (Mr Roberts). Auto Net’s directors are now Michael Pearson and Christopher Rowland who were appointed as independent directors of the ultimate beneficial owners of Auto Net. The ultimate beneficial owners of Auto Net are Mr Stone’s wife, Luciane De Souza Fernandes, and interests associated with Mr Hemi.

[3] Mr Stone and Mr Hemi have conducted international business enterprises together for a number of years. Mr Stone and Mr Hemi have now fallen out, and there is litigation in a number of jurisdictions, including New Zealand, between them and/or companies or entities with which they are associated.

[4] One such enterprise is a Japanese-registered company, IBC Japan Ltd (IBC). It sells Japanese cars to New Zealand buyers. Until recently, IBC sold cars to a New Zealand member of the Hemi/Stone commercial group, Autoterminal New Zealand Ltd (ATNZ). Mr Hemi now controls IBC, and ATNZ no longer purchases cars from IBC. Litigation is pending between IBC and ATNZ.

[5] In 2004, Mr Tyler was appointed sole director of ATNZ and in 2008, at the request of Mr Stone and Mr Hemi, he agreed to leave his role in the Philippines to return to New Zealand in order to manage ATNZ on a full-time basis. He says Mr Stone and Mr Hemi agreed to give him full decision-making control over ATNZ’s business and a full indemnity backed by Mr Stone, Mr Hemi and entities with which they were associated.

1 Auto Net v Tyler [2020] NZHC 2459.

[6] Later, in 2009, Auto Net’s 100 per cent shareholding in ATNZ was transferred from Auto Net into Mr Tyler’s name. This was to avoid the need for ATNZ, as a foreign-owned company, to file annual accounts with the Companies Office. That would have disclosed the level of ATNZ’s indebtedness to IBC…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Auto Net v Tyler

Details

AGLC: Auto Net v Tyler [2021] NZHC 542
Case: [2021] NZHC 542
Decision Date: 17 March 2021

CaseChat Overview and Summary

Auto Net sought leave to appeal from a decision of Associate Judge Smith of 21 September 2020, refusing it summary judgment against Mr Tyler in proceedings brought to compel him to transfer shares in ATNZ to it. Mr Tyler opposed the application. The appeal was heard by Associate Judge Paulsen on 11 March 2021 and judgment was delivered on 17 March 2021. Auto Net wished to advance three grounds of appeal. The first was that the Associate Judge was wrong to find it was reasonably arguable that Mr Tyler held the shares subject to a requirement that he was not to transfer them to anyone without the consent of Mr Stone and Mr Hemi. The second was that it was arguable the rule in Saunders v Vautier applied in circumstances where the beneficiary had accepted a restriction on its entitlement to call for delivery of the trust property. The third was that it was arguable the total amount secured by Mr Tyler’s equitable lien over the shares may equal or exceed the value of the shares. The court found that the appeal was capable of serious and bona fide argument and that the appeal was of sufficient importance to Auto Net to outweigh the cost and delay of appeal. The appeal was granted.

Orders